Apple In A Rush To Diversify iPhone Production Out Of China — Analyst Says Hold Your Horses, It Won't Be That Easy

Apple Inc. AAPL is looking to quickly reduce its iPhone production exposure to China, Wall Street Journal reported over the weekend. The transition may not come easy for Cupertino, according to an analyst.

The Apple Analyst: Apple analyst Daniel Ives maintained an Outperform rating and $200 price target for the stock.

The Apple Thesis: China’s zero-COVID policy has left Apple with “unprecedented” iPhone shortages this holiday season, Ives said in a note. The shift out of China will not be easy and come with clear logistical, engineering and infrastructure hurdles, the analyst said.

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With the company already alerting the Apple ecosystem, the aggressive move to India and Vietnam has begun, the analyst noted. If Apple moves aggressively, more than 50% of iPhone production could come out of India and Vietnam by 2025/2026, Ives said. This is as opposed to the single-digit percentage contribution from these countries currently, he added.

Calling China’s COVID-19 policy a black cloud over iPhone production, Ives said fears that lockdowns will continue and repeat in 2023 persist. This leaves Apple with no choice but to make these painful logistical moves, he added.

Price Action: Apple closed Friday’s session down 0.34% at $147.81, according to Benzinga Pro data
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